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Stocks mixed after digesting Friday's gains

Stocks were mixed and choppy on Monday following the big rally on Friday. The Dow traded in a 300-point range - up 120 and down about 180 - before closing down 157-points. The Dow is lagging as the large export-rich companies are still pricing in the potential consequences of the tariffs. The Nasdaq continues to lead on the upside following Friday's breakout to new highs with another new high on Monday.

After an explosive rally triggered by the jobs report on Friday, the market took a little breather on Monday. A lot of uncertainty may have been cleared up with the jobs report out of the way, the new tariffs signed, 1st quarter earnings season behind us, and a potential mending with North Korea, but the market may get a little choppy while waiting on next week's Federal Reserve meeting and probable interest rate hike. We had a big week last week and those gains may need to be digested now that a lot of those question marks have been answered and the market awaits its next catalyst. So, where are we?

Inflation and wage growth under control? Check

Global growth? Check Earnings? Check

North Korean Talks? A positive

Tariffs signed and in place? Check, but impact not fully known yet.

So there's a lot to be positive about, but it's all out in the open and potentially already priced in so be on the lookout for some profit taking because this is where the dumb money tends to read the rearview mirror headlines and reacts after the fact, while the smart money takes some off the table.

One caveat is that starting on the 15th there are a few days with a particularly positive seasonal bias, but on the 19th it gets more negative, with a few exceptions in there. Of course seasonality is not a primary indicator so don't go strictly by this.

The S&P 500 / C-fund tried to rally again on Monday, following up on the big jobs report rally on Friday, but stocks got a little fatigued after the positive open and we saw some profit taking, as we thought could be the case after a surprise jobs report rally. That open gap below 2750 looks primed for a potential pullback target, and of course the bottom of the flag formations are also potential targets.

The small caps / S-fund did well again as it may be a play against the tariffs as investors shy away from the large caps favoring the smaller, non-exporting companies. Bigger may not be better right now because of those uncertainty of the new tariffs.

The Dow Transportation Index also stalled after Friday's rally, and while there is still room on the upside within the trading channel, this is still a bearish looking flag and caution may be warranted in the intermediate-term.

The EAFE Index / I-fund has been lagging and is well off its highs, as opposed to an index like the Nasdaq which is making new highs. This is a clear bear flag and caution is warranted here as well.

The AGG (bonds / F-fund) remains in a consolidation that looks like a bear flag, so this chart continues to look weak.

Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php

The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.